Brazil 2014

What The World Cup Will Do To Brazil's Economy

Six months from kickoff, two economic assessments, pro and con, as the world's most popular sporting event lands in the 'B' of BRICS.

Gooooooooooooooaaaaaaaaaal... ?
Gooooooooooooooaaaaaaaaaal... ?
Caio Megale and Marcelo Weishaupt Proni

SÃO PAULO — The countdown has begun to June 12 when the FIFA World Cup kicks off in Brazil, which is hosting the planet's most popular sporting event for a second time, after the fourth edition in 1950.

Much has been said about the economic and social situation of the country, especially after last summer's protests against government corruption and the hike in transport prices in major cities such as São Paulo. And while a global event like the World Cup opens up new economic opportunities for hosting countries, the amount of money spent for the occasion also raises the question of whether it is all worth it. Here are three arguments from two economists to help weigh the pros and cons.

PRO (Caio Megale)

1. What Gets Built, Stays
The World Cup comes at a timely moment for Brazil. Over the past two decades, the country's economy has grown significantly thanks to thriving consumption, and is now more stable. But new challenges lie ahead. Weaknesses in infrastructure and productivity have been holding back the progress of the economy, putting the need to increase investments in the spotlight.

Organizing such a big event offers opportunities to make massive new investments and therefore accelerate the development of different sectors. The 12 host cities will benefit from expanded airports, improved transport systems and better telecommunication services. Although these upgrades were necessary, they hardly would have taken place simultaneously if it wasn't for the World Cup.

2. Going Global
Long-term development could emerge in several key industries and markets. Along with the World Cup come opportunities to boost international trade, making the country's companies more global. This is particularly important in Brazil, where under 1% of exports come from small and medium-sized businesses.

Foreign entrepreneurs have come to Brazil to do business during the preparation and will come during the event. If they play their cards right, sharp Brazilian entrepreneurs could take advantage of this and build strong and lasting international ties. This experience will bring new technologies, more knowledge and will expand the consumption market.

3. Fun, Sun And English
The organization of this global event encourages companies to train their workers to better satisfy new customers by, for instance, teaching them new languages. The impact on the productivity of these workers could be substantial and lead to significantly higher wages, especially in a country where only a small proportion of the workforce speaks English.

A rendering of the Arena Amazônia in Manaus — Photo: Copa 2014

These opportunities are obvious in sectors such as services (restaurants, event planning and executive transport), sports and tourism. If they are satisfied with their stay, foreign delegations will no doubt advertize in their own countries the services they used in Brazil, thus creating a strong demand. Past editions of the FIFA World Cup indicate that the increase in the flow of tourists can last. In addition, the new stadiums and the spirit of the World Cup have a long-term effect on the population's interests in practicing sports.

CON (Marcelo Weishaupt Proni)

1. Do The Math
Whatever the promised benefits brought by the World Cup are (a boost to GDP, tax revenue, tourism, jobs and public transportation), they will for the most part be limited to the 12 host cities.

Moreover, there is evidence that the legacy of the World Cup won't be quite what was initially expected. Predictions of its potential economic impact are based on suppositions that don't reflect reality. For instance, the estimates of the number of jobs created directly and indirectly by the event don't consider the increase in productivity and the fact that as a result, companies might produce more and offer more services without creating a significant number of permanent jobs.

2. Stadiums or Hospitals?
The total cost in infrastructure investment for the World Cup is estimated to be over 25 billion reais ($10.5 billion), of which only 15% are financed by the private sector. In this case, this expenditure risks causing reductions in public spending in other areas that it is better suited for. It's common knowledge, for example, that public money is more efficient when spent in the building a new hospital rather a new stadium.

In Sao Paulo — Photo: Marlon Dias

These 25 billion reais only represent 5% of the total of Brazil's Growth Acceleration Program (known as PAC and launched by former President Lula before being continued under current president Dilma Rousseff). So all in all, the World Cup isn't excessively expensive for an economy of that size. But in the case of some sites, the money borrowed by local authorities could be a burden that will compromise the realization of other projects.

3. White Elephants?
The World Cup will without a doubt be very profitable for the world soccer federation FIFA, as well as a fine business deal for big companies involved in the construction — or in some cases, refurbishment — of the stadiums. But for the country and the population of some of the 12 host cities, these arenas could end up as expensive and unused installations, known as white elephants, a situation reminiscent of that faced by Portugal, with the country considering razing some of its stadiums just a few years after it hosted the 2004 UEFA championship.

Come August when the competition is over, the city of Manaus, situated in the heart of the Amazon forest, will be left with a stunning-looking stadium. But the four World Cup games that will take place there are likely to be the only soccer the venue will see, as the city doesn't even have a top flight club. The same can be expected of Natal, Cuiaba and even of the capital of Brasilia, causing soccer legend Romario to say "Maybe they'll stage concerts at those stadiums a few times a month, but that aside, they're a joke."

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The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation


Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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